Weekly Review for week ending 9/6/24
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Stocks took a sharp hit last week, with the NASDAQ dropping around 6% and the S&P 500 falling a little over 4%. Small-cap stocks followed suit, also declining by 6% (FactSet). So, what’s behind the pullback?
In July, the U.S. job market showed further signs of cooling. Job openings remained stable at 7.7 million but are down significantly from a year ago. Hiring stayed steady at 5.5 million, while separations, including quits and layoffs, rose slightly to 5.4 million. Fewer people are voluntarily quitting their jobs compared to last year, which suggests workers might be feeling less confident about making job changes. Key sectors like healthcare and government saw a decline in job openings, while accommodation and food services showed increased hiring. Overall, the labor market remains active but continues to cool off gradually(BLS).
In my view, this indicates stabilization rather than a free fall in the labor market, as some had feared earlier in the summer. Given widespread criticism that the Fed had waited too long and kept rates too high, this stability suggests they may have managed things well. It also strengthens the case for a modest rate cut of 0.25% instead of a larger 0.50% cut at the upcoming meeting.
Looking Ahead
This week, we'll be watching for key inflation data with the CPI report on Wednesday and the PPI report on Thursday. The Fed is set to announce their rate decision on the 18th.
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